The Bank of England’s interest-rate-setting committee is set to become majority female for the first time, after the appointment of a former key adviser to David Cameron and George Osborne as one of its deputy governors.
Clare Lombardelli, the chief economist at the Organisation for Economic Co-operation and Development (OECD), will sit on the nine-member monetary policy committee (MPC) when she joins as the Bank’s next deputy governor for monetary policy.
The former Treasury official will start her five-year term at the Bank on 1 July, succeeding Ben Broadbent, after King Charles approved the appointment.
The MPC – created in 1997 after the central bank was given independence by the then chancellor, Gordon Brown, and led by the governor, Andrew Bailey – will comprise four men and five women after she takes up the position.
The chancellor, Jeremy Hunt, who chose Lombardelli for the post, said: “Clare brings significant experience to the role, tackling financial and economic issues both domestically and internationally.”
Her arrival will come at a crucial time for the central bank, which is under pressure to cut the cost of borrowing to support the economy’s exit from a recession during the second half of last year. Financial markets expect the Bank to begin cutting interest rates in the summer to ease pressure on mortgage payers and indebted businesses.
Hunt said Lombardelli would also lead the response to recommendations expected next month from the former US Federal Reserve chair Ben Bernanke to improve the Bank’s forecasting process, as well as overseeing monetary policy.
That response had been expected to come from Broadbent, after sustained criticism of the central bank’s ability to predict the effects that the Covid pandemic and the Ukraine war would have on inflation.
Several Conservative MPs, including the chair of the all-party Treasury committee, Harriett Baldwin, have said the Bank carried some of the blame for allowing inflation to rise to its highest level in 40 years after delays to interest rate increases.
Jagjit Chadha, the director of the National Institute for Economic & Social Research, wrote last year in the Financial times that Threadneedle Street was “increasingly providing a kind of retirement home for former Treasury officials”.
Chadha said he was concerned that the independence of the central bank was becoming compromised by an influx of Treasury officials, including deputy governor, Sir Dave Ramsden, and Sam Woods, the head of the Bank’s regulatory arm, the Prudential Regulation Authority.
Lombardelli started her career at the Bank of England, but left to join the civil service in 2005. In 2007 she was deputy director for labour market policy in the Treasury before joining Cameron at 10 Downing Street as the private secretary for economic affairs to the prime minister.
While at No 10, she gained first-hand experience of the debt crisis spreading across southern Europe while seconded to the International Monetary Fund where she was part of a team based in the Greek finance ministry to monitor bailout terms during 2010 and 2011.
In 2012 she moved to support Osborne as chancellor in the coalition government. Known as one of the architects of austerity alongside Osborne’s colleague Rupert Harrison, Lombardelli later took up a more senior role as Treasury chief economist under the Conservative chancellors Philip Hammond, Sajid Javid and Rishi Sunak.
Her departure to the OECD early last year had been seen as a blow to the UK government, as she had 20 years’ experience in economic analysis.
Bailey said: “I’m really pleased to welcome Clare Lombardelli back to the Bank as deputy governor for monetary policy. Clare’s impressive career means she brings a huge amount of relevant experience and expertise to the MPC, and the Bank more broadly, at a time of great importance for the UK economy.”
Nick Macpherson, a former Treasury permanent secretary, said: “Great appointment. Clare is uniquely qualified for this post, combining analytics rigour with excellent judgment.”
In a reference to critics of the Bank’s record tackling inflation, he added: “Her anti-inflationary credentials are impeccable.”
